In the context of fiscal constraints faced by local governments, it is an imperative issue to improve the allocation of science and technology (S&T) expenditure and enhance the efficiency of regional innovation systems. Research and development activities can be divided into basic research, applied research, and experimental development. Based on the resource-based view, extant studies suggest that the structure of local S&T expenditure as a critical resource endowment, directly shapes innovation performance. Beyond the resource-based view, local governments must weigh central mandates and peer competition—rather than efficiency alone—when setting S&T budgets, owing to multidimensional performance metrics.

Extant literature shows that local governments exhibit two distinctive traits when allocating S&T expenditure under the institutional pressure. First, local government complies the S&T strategies of central government. Within China’s centralized political system, subnational governments consistently align their fiscal priorities with those of the central government. When a national S&T initiative is announced, local governments rapidly mobilize resources to establish similar projects—such as provincial-level science parks, key laboratories, and engineering research centers—that closely reflect the central policy blueprint. Second, there is a convergence in S&T expenditure across local governments. As fiscal S&T expenditure has become a key performance metric in governmental evaluation systems, competition among local governments in the S&T domain has significantly intensified. In pursuit of competition advantage, local officials routinely benchmark their S&T expenditures against peer regions and recalibrate their budgetary allocations in response. This strategic behavior results in a noticeable homogenization of S&T funding patterns across local governments.

Although existing studies indicate that local governments align their fiscal S&T expenditures with both central and peer governments, few studies have examined the impact of such conformity on regional innovation performance. Furthermore, while prior research has mainly examined convergence in the scale of S&T expenditure, little attention has been given to structural conformity in fiscal S&T expenditure. Under the current fiscal constraints, how local governments choose the structure of S&T expenditures to improve regional innovation performance is a critical issue.Based on organizational legitimacy theory, this study examines the relationship between compliance, convergence of local government of S&T expenditure structure and regional innovation, as well as the moderating role of local official turnover. Using an unbalanced panel dataset from 31 provinces (excluding Hong Kong, Macao, and Taiwan) from 2013 to 2022, we employ a fixed-effects ordinary least squares (OLS) model.

The findings reveal that compliance with central government in fiscal S&T expenditure structure is positively associated with regional innovation. That is, when local governments align their S&T expenditure structure with that of the central government, they gain access to central S&T resources and policy support, thereby fostering regional innovation. Conversely, there is an inverted U-shaped relationship between convergence with peer governments and regional innovation. The moderate level of conformity in S&T expenditure structure among local governments helps accumulate R&D resources and facilitates innovation; however, beyond a certain threshold, the costs of homogenization outweigh the legitimacy benefits, ultimately hindering regional innovation. Furthermore, the local official turnover weakens the positive relationship between compliance and regional innovation but does not significantly affect the relationship between convergence and regional innovation.